Now You Can Frequent To Restaurants As GST Slashed By 13%

Currently, GST is levied at 12% on food at non-AC restaurants, while it is 18% for air-conditioned ones.

Restaurants will not get the benefit of input tax credit under the revised GST rules.

The next time you go to restaurants you will have to pay a uniform GST rate of 5 per cent, instead of 12 per cent or 18 per cent earlier depending on AC or non-AC restaurants. This was decided at the 23rd meeting of the GST Council meet today in Guwahati. But restaurants won't get the benefit of input tax credit, a facility to set off tax paid on inputs with final tax. Currently, GST is levied at 12 per cent on food at non-AC restaurants, while it is 18 per cent for air-conditioned ones with input tax credit benefit for restaurants.

Finance Minister Arun Jaitley, addressing a press conference, said that the Council was of the view that most restaurants did not pass on the benefits of input tax credit to customers by reducing prices after GST was implemented from July 1.

Experts said that it needs to be watched how restaurants price their food after removal of input tax credit benefit. Restaurants currently get input tax benefit on rent, food and other items.

"Five per cent rate on restaurants (except those in star hotels) without any input credit might not be the best decision from a tax policy standpoint and breaks the chain (of input tax benefits), which is not desirable. From a consumer standpoint, however, it should lead to some decrease in prices particularly in case of small restaurants," said Pratik Jain of PwC. "This decision seems to be based on government's belief that the industry has not passed on the input credit benefit to customers."